According to the busybox documentation, /proc/sys/kernel/hotplug contains the path to a program that will be invoked on hotplug events (hotplug here means the creation of a new device node under /dev, not necessarily actually plugging something onto the box).

Doing the above 'echo' will result in kernel invoking mdev when a hotplug event fires; mdev will then act upon the newly-created device node according to the 'recipe' in /etc/mdev.conf, e.g., chown-ing the node, renaming/moving the node, making a symlink, or even triggering a script.